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Regulation and Compliance > Federal Regulation > IRS

GAO: IRS Needs to Plan Better for PPACA

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The Internal Revenue Service (IRS) is about to spend $881 million on implementing the Patient Protection and Affordable Care Act of 2010 (PPACA), and it needs to do more to keep PPACA projects from running off the rails.

Officials at the U.S. Government Accountability Office (GAO) give that assessment in an IRS PPACA implementation risk management plan review prepared at the request of lawmakers at the Senate Appropriations Committee and the House Small Business Committee.

Congress included 47 provisions requiring IRS action in PPACA, and created challenges for the IRS by having about half of the 47 provisions take effect in or before 2010, James White, a GAO director, writes in a letter summarizing the GAO officials’ views on the IRS PPACA implementation risk management plan.

Because of the nature of the deadlines involved, the IRS is having implement PPACA at the same time that it’s doing long-range PPACA planning, White says.

The IRS, an arm of the U.S. Treasury Department, could do better at explaining who at the IRS will evaluate risk mitigation strategies, deciding how it will determine whether it has the resources to support the mitigation strategies chosen, and making sure managers document the reasons for their decisions, White says.

The GAO included a number of PPACA risk management plan recommendations in a 2011 plan review.

“While IRS developed a risk management plan for PPACA implementation that meets several leading practices, IRS did not take any actions to implement our 2011 recommendation on assessing mitigation strategies,” White says in the letter.

The IRS has set up a PPACA Executive Steering Committee to manage PPACA implementation.

The steering committee includes three program management offices and implementation teams and four operational divisions.

The program management offices and implementation teams oversee four PPACA business workstream teams.

The business workstream teams, for example, include one for oversight and PPACA provisions not involving health insurance exchanges; a second for the PPACA health insurance premium assistance tax credit provisions; a third for compliance strategy and policy; and a fourth for customer and stakeholder engagement.

In 2011, the GAO asked the IRS to use GAO-recommended methods to estimate PPACA project costs.

The GAO believes the process of creating a cost estimate should include “sensitivity, risk, and uncertainty analysis; using more than one method in calculating major cost elements to see if results are similar; and comparing results to independent cost imate,” according to a table in the GAO report. The IRS has “minimally met” that objective, the GAO says.

For now, the IRS does not have a very reliable cost estimate, but that could change once the IRS completes plans to hire an independent consultant to come up with a better cost estimate, White says.

“To strengthen the PPACA risk management plan, we recommend that the Commissioner of Internal Revenue enhance guidance on evaluating risk mitigation alternatives to clarify who is responsible for doing the evaluation and making decisions based on the results as well as how they might do the evaluation,” White writes elsewhere in the letter.

The IRS also should develop agreements with the U.S. Department of Health and Human Services and other agencies to create a system for recording and tracking details on the decisions made, to esnure that risks are identified and mitigated, White says.

IRS officials say they agree with the recommendations and will revise their risk management plan to address the GAO’s concerns.


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